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One of the most important tasks in starting a business is pulling together enough money to launch and grow. A lack of adequate funding can lead to business failure as expenses outpace profits. Funds to start a business can come from several resources, including banks and investors who will lend money on a variety of terms. Obtaining a business loan requires a well-designed business and professional business plan.

1.

Calculate the amount of money you need to borrow. Determine the one-time costs, such as the purchase or rental of retail or office space, furniture and equipment. Include ongoing expenses, such as rent, phone services, accounting services, marketing and supplies.

2.

Write a business plan outlining all the details of your businesses. The business plan isn't just a road map for business success--it's also a marketing document you need to obtain financing. It should not only describe your business' products or services in detail, but how they differ from the competition. Define your target market and explain how you'll market to it using specific examples of promotional strategies. Include a financial section with information on the business' current financial state, its budget and income and expense projections for the next 12 months. Use an appendix to include supporting materials such as your business license, sample marketing materials and intellectual property rights.

3.

Lend yourself money first. While it is possible to start a business using none of your money or assets, some lenders and investors measure your commitment by how much you've personally invested in the business. You can use cash or assets that can be sold or used as collateral.

4.

Apply for a business loan. Visit your local Small Business Administration office or online to learn about lending resources in your area. The SBA doesn't lend money directly, but works with lenders to offer small business loans.

5.

Contact your local or state's economic development agency about business loans. If your business will contribute to your community, such as creating jobs or improve some aspect of the community, loans may be available to help you start your business.

6.

Join trade associations related to your business. Many associations have business financing resources available to its members.

7.

Network to find potential investors. Investors lend money in exchange for part ownership of the business or a share of the profits. Many areas have an angel network of investors. Get involved with your local chamber of commerce and participate in networking groups to learn meet potential investors.

Warning

Have your lawyer review any contracts made with investors to ensure you retain control of your business as well as fully understand the terms of the investor's financial contribution.

References (3)

About the Author

Leslie Truex has been telecommuting and freelancing since 1994. She wrote the "The Work-At-Home Success Bible" and is a career/business and writing instructor at Piedmont Virginia Community College. Truex has a Bachelor of Arts in psychology from Willamette University and a Master of Social Work from California State University-Sacramento. She has been an Aerobics and Fitness Association of America certified fitness instructor since 2001.

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Truex, Leslie. "How to Borrow Money for a Business." Small Business - Chron.com, http://smallbusiness.chron.com/borrow-money-business-1946.html. Accessed 25 May 2019.

Truex, Leslie. (n.d.). How to Borrow Money for a Business. Small Business - Chron.com. Retrieved from http://smallbusiness.chron.com/borrow-money-business-1946.html